Gauging the ROI of Creating an Excellent CX in Your Applications

by Carmen Apostu
Blog Post

Customer experience (herein referred to as CX) is crucial for your app. We probably don’t have to twist your arm for you to realize that what your users’ experience inside your applications bear a great deal of usability and engagement.

But what about your revenue?

Sure, anyone would probably say that a poor user experience may cost you users in the end and data would back that up.

Key Stat: Over 80% of people who leave a company’s products and services do so because of a bad experience.

If you want to improve your product’s CX because there is too little engagement or a high churn rate, it proves that you’re behind. While that sounds blunt, it’s true. Your CX is second only to the core value your application provides.

Example: If you create a Taxi app that helps people get around, but the experience is so terrible that it makes users want to ride a bus; it should be clear just how “in the weeds” your development has become.

This post isn’t about whether or not a bad CX will hurt your company, that science is pretty sound. However, can investing in a better experience for your customers make you more money? And if so, is there a way to measure the return on your investment (ROI) of a better and more intuitive application?

Essentially, the answer is yes. Now, we hope to explain why we believe so and how to gauge that ROI.

The Case for Building a Better Experience

If your app has acceptable rates of engagement and churn, it’s prime time to think about upping your CX game. Why?

The data proves that the better experience your products create, the easier it will be to grow your user base and overall revenue. The key metric in all of this is your existing client base. The people who you are already serving are your biggest asset to future financial success. Increasing the value for current users is directly correlated to your bottom line.

There are several data-driven metrics that can help you determine the success of CX improvements. We’ll go over a few; as well as some tips and examples to help you along. They are:

  • Lower Churn Rate
  • Higher Customer Lifetime Value (CLV)
  • Lower Customer Acquisition Cost (CAC)

Lower Churn Rate

One of the most telling indicators that the overall user interface is working or not are the number of people deleting an app or canceling their SaaS service in a given month.

It’s called churn.

If your churn is above 5% (the loose average for the industry), then you are losing more than revenue. With a ratio of customers leaving every month, you sacrifice momentum. For instance, if your app is doubling the number of users every month and losing 1 of ten of them per month. Your growth rate is hampered.

Now, imagine that an updated CX that users love cuts the churn in half. If you are a SaaS with a decent recurring fee, it doesn’t take long to figure out the ROI on that investment. Let’s put it to some numbers anyway.

Example: 10,000 users at with a 10% churn equals around 1,000 people leaving in a month. Cut that number in half to 500. If your average price point is $20/month, that’s $10k every month added to your balance sheets.

Improving Your Churn with CX

People leave fast or when they find something better, but the reasoning is usually the same. Your digital tool may solve a problem, but if it isn’t easy and maybe even entertaining, many will leave quickly while the rest will wait for another option. Here are a few tips to help lower that number:

  • Roll out the red carpet to welcome new users: Make everything plain and intuitive to help them get started and create a good first impression (after all the first CX is the most important).
  • Make sure your customers win (soon): Whatever your program promises to do for your users, make sure it happens for them. Initial customer success will decrease churn.
  • Make your app more valuable: Utilize an open API and provide closely-related tools that make your product more valuable and less likely to be deleted.

Higher Customer Lifetime Value (CLV)

Studies show that people are willing to pay more for good customer service (an average of 13% more).

Chances are, you are going to create new (related) applications that either compliment or even directly improve the one that you already have. At the very least, you’ll experiment with different business models and packages to offer an opportunity for your current customers to be upsold.

Great, if that is your plan, you definitely need to improve your current CX.

Selling new customers is difficult. There is education, lead-nurturing, and several other factors that go into warming up a cold audience. That said, the probability of selling to the people who are already customers is around 70%. But it won’t happen if they don’t feel taken care of with your current offering.

Improving Your App’s CLV with CX

  • Constantly improve your app: Updates go a long way toward hanging on to those monthly users. Make sure you are constantly improving your app to be more beneficial.
  • Stay in touch with your users: Designing communication notifications and other ways to keep talking (not annoyingly or sales-y).
  • Make your app more valuable: This tip is worth repeating. Create an open list of applications to integrate with and use Saasler to help.

Lower Customer Acquisition Cost (CAC)

We’ve talked about how to keep the customers you have, and how to get more from them over the life of their use of your product(s). Now it’s time to tell you how all of that fits in to lower the amount you spend to get new users.

How does investing in a CX overhaul lower the amount you spend to acquire customers?

Simple.

If your app is bad, brand bashers will naturally occur. For each person you fail to impress, the studies show that a person that felt mistreated or unsatisfied will tell 16 people to avoid a product. On the flip side of the coin, if a person was thoroughly impressed with a product, they will recommend it to 9 people on average.

Let’s break that down:

Bad CX = Brand Basher Good CX = Brand Ambassador

Side Note: If your app performs the function desired, but provides a subpar experience, you could have a neutral customer that neither bashes nor promotes your product. If you haven’t invested in creating a great CX, it’s probably where most of your users stand making that leap could dramatically lower the cost to acquire new clients.

Improving Your App’s CAC with CX

  • Add a referral system: An in-app system that tracks users who recommended their friends and colleagues is a great way to reward and encourage users to get involved and start spreading the word.
  • Learn from users: Gather the intel that matters from the people that use your app. If they have issues, make it easy for them to let you know. Creating an experience that they desire while also impressing them with your action.
  • Build loyalty: Figure out ways to implement and drive people to spreading the news about you.

Hopefully, you understand the need for the best customer experience possible for your users. Not only is it good for your client base, but it can have some hefty ROI.

If you need help creating a ridiculously effective CX or need to use our latest tool to add fantastic integrations to your SaaS, contact Koombea to see if we are a good fit for your project.

by Carmen Apostu
Blog Post